A new trade was taken today in CTSH, Cognizant Technology Solutions Corp. The trade was a buy after CTSH had fallen over 7 candlesticks straight down without a higher high. A buy such as this works best on stocks in an uptrend or in the base of an uptrend in the daily time frame.

The stock was in a death spiral down. The key is to wait for the higher high. You then place the stop below the low bar, and the difference between the bottom of that candlestick, and your entry is R or risk. In the case of CTSH, R was equal to .30. The end target for the daytrade was 2R, selling 1/2 and moving the stop to breakeven at 1R.

The 15-minute candlestick chart was chosen because it filters out a little more noise or jiggles than the 5-minute chart. This stock trade was successful, but it may have been better to sell in thirds.

Note that this stock has been in an uptrend on the daily chart and basing currently. We’ll call this pattern an Extreme Bull Long, or eBL. After a sharp fall to the downside, the tide in CTSH shifts and more buyers than sellers appear. Remember to trade this on uptrending stocks that have had strength. You’re just looking for a bounce in the stock.

Stock patterns shown on this site occur every day. Today a BS2 signal was alerted for the oil stock VLO. Valero Energy Corp. has been on a tear the last few years as oil stocks have skyrocketed along with the price of oil. Lately the stocks have slipped though. VLO gapped down in the morning and proceeded to trigger the pattern to short. .3 = R.  Let’s look at the trade.

The trigger to short VLO hit as soon as a lower low candlestick traded. A stop was placed a penny above the prior bar’s high. A target of 2R was set for the trade. As you can see, 1/2 the shares were sold for 1R and the other 1/2 for 2R. Next time a trade like this pops up, it may be better to sell 1/3 at 1R, 1/3 at 2R and 1/3 near the close. Trading VLO was successful, but it’s good to work on getting the most out of every trade.